H2 sales in China petroleum, chem industries to drop- analysts

25 August 2010 07:15  [Source: ICIS news]

By Judith Wang

SINGAPORE (ICIS)--China’s petroleum and chemical industries are expected to show a slower growth in revenue for the second half of 2010 compared to last year due to deceleration in the economy, analysts said on Wednesday.

July revenue from the petroleum and chemical industries rose 24.4% year on year to yuan (CNY) 713.4bn ($105bn), 7.2 percentage points less than in June, according to a report released by the China Petroleum and Chemical Industry Federation (CPCIF).

Petroleum and chemical industries had posted a strong 41% rise in revenue on increased output and strong demand for the first six months of the year.

“The sales growth in the second half [of 2010] will definitely slow down because the sales basis during the same period of last year was very high,” said Wang Qiang, an analyst from Shanghai-based brokerage firm Xiangcai Securities.

The petrochemical industry could face further downward pressure in the second half, as China’s efforts to control the property boom could reduce demand from the construction sector, said Lu Zhen, an analyst with Shanghai-based brokerage house Galaxy Asset Management.

Chinese vice president Li Keqiang twice this month emphasized the need to curb property speculation, state-run media Xinhua reported.

A drop in downstream demand has also reduced the petrochemical industry’s revenue growth, analysts said, adding that demand growth would fall further in the coming months.

Average housing prices in some cities surged 25-50% in 2009 pushing China to mandate a minimum 50% down payment for second homes in a bid to control the speculation, sources said. 

However, increased auto sales, reflecting the growing purchasing power of China’s middle class could offset the reduced demand from the housing market, analysts said.

China’s July auto production rose 15.67% year on year to 1.29m units while the car sales grew 14.42% to 1.24m ones, based on data from China Association of Automotive Manufacturers (CAAM).

China’s revenue growth in the petroleum and chemical industries surged 47.1% year on year in the first quarter and grew 41% in the first half of 2010, according to CPCIF.

Full-year sales in the industries for 2010 were expected to rise by 29.3% from last year to CNY8,570bn, with sales growth in the third quarter predicted to increase by 25.2% year on year and that for the fourth quarter to go up by 16.5%, CPCIF had said in an earlier report.

($1=CNY6.80)

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By: Judith Wang
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